Correlation Between Ankit Metal and Power FinanceLimited

Can any of the company-specific risk be diversified away by investing in both Ankit Metal and Power FinanceLimited at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ankit Metal and Power FinanceLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ankit Metal Power and Power Finance, you can compare the effects of market volatilities on Ankit Metal and Power FinanceLimited and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ankit Metal with a short position of Power FinanceLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ankit Metal and Power FinanceLimited.

Diversification Opportunities for Ankit Metal and Power FinanceLimited

0.77

Correlation Coefficient

Ankit Metal  Power FinanceLimited

Poor diversification

The 3 months correlation between Ankit and Power is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ankit Metal Power and Power Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power FinanceLimited and Ankit Metal is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ankit Metal Power are associated (or correlated) with Power FinanceLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power FinanceLimited has no effect on the direction of Ankit Metal i.e., Ankit Metal and Power FinanceLimited go up and down completely randomly.

Pair Corralation between Ankit Metal and Power FinanceLimited

Assuming the 90 days trading horizon Ankit Metal Power is expected to under-perform the Power FinanceLimited. In addition to that, Ankit Metal is 1.2 times more volatile than Power Finance. It trades about -0.32 of its total potential returns per unit of risk. Power Finance is currently generating about -0.01 per unit of volatility. If you would invest  44,301  in Power Finance on December 25, 2024 and sell it today you would lose (1,751) from holding Power Finance or give up 3.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Ankit Metal Power  vs.  Power Finance

Ankit Metal Power

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ankit Metal Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Power FinanceLimited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Power Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Power FinanceLimited is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ankit Metal and Power FinanceLimited

The main advantage of trading using opposite Ankit Metal and Power FinanceLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ankit Metal position performs unexpectedly, Power FinanceLimited can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Power FinanceLimited will offset losses from the drop in Power FinanceLimited's long position.

The idea behind Ankit Metal Power and Power Finance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.